APTX - Aptinyx: Readout Imminent For NYX-458 In Parkinson's Disease Dementia

Summary

• Aptinyx is a clinical-stage biotech company with two drug candidates, NYX-458 and NYX-783 aiming to modulate NMDA receptors.
• A Phase 2 topline data readout of NYX-458 in Parkinson’s disease dementia is announced for the coming days or weeks.
• Aptinyx’s stock has performed poorly over the past years, due to the failures of another drug candidate for fibromyalgia and painful diabetic peripheral neuropathy.
• A Phase 2b readout for NYX-783 in PTSD should follow later this year.
• The upcoming readout may be a binary event given the company’s current market cap.

Thesis

Aptinyx's ( APTX ) market cap has been severely beaten down in over the past years, largely as a result of three clinical readouts for NYX-2529.

After a first unsuccessful topline phase 2 readout in 2019 and two more in the course of 2022, all for NYX-2529, the company has now aborted further development of that drug candidate.

That leaves the company with only NYX-458 and NYX-783.

The company currently has a $39 million market cap, which has more than doubled from its 2022 lows and now comes close to the company's latest-reported cash value. The rise is recent and may be in anticipation of upcoming readouts.

The current analyst ratings show a 287% upside for the stock.

The NMDA receptor is implicated in various diseases of the central nervous system. Both NYX-458 and NYX-783 are novel, oral NMDA receptor modulators, which the company claims are differentiated from other drugs targeting the NMDA receptor.

I believe that success reported may be a kickstarter for the stock, but things may turn out different if the upcoming readouts are not well received. At this point, it would be impossible for anyone to guess how a readout of NYX-458 may turn out. As to NYX-783, earlier Phase 2 results reported from a Phase 2 trial had been received as a mixed bag.

Though management sounds confident, for me the stock is very high-risk for the moment. I try to share the bull and bear thesis for both of Aptinyx's drug candidates.

Company

Pipeline

Aptinyx has a pipeline with various NMDA modulating drug candidates. The current ones are NYX-458 for cognitive impairment in Parkinson's disease, and NYX-783 for PTSD, opioid use disorder and alcohol use disorder. NYX-783 has received fast track designation for PTSD, and the company has recently received an impressive $5.6 million NIH grant for the treatment of opioid use disorder.

The markets for both drug candidates are enormous. The market size of PTSD is estimated at $16 billion. The market for opioid use disorder is estimated at $3 billion, with relapse rates estimated as high as 90%, and an enormous societal burden. The market size of Parkinson's disease dementia's is $2.5 billion, and only 1 therapy has been approved in the year 2000, namely rivastigmine or Exelon.

All of Aptinyx's drug candidates are derived from a common platform focused on NMDA receptor modulation. But as these candidates are different, and as the NMDA receptor may play different roles in the different indications that are targeted, risks may be diversified.

As such, there may be some promise in targeting the NMDA receptor, as is shown by good results coming from the approved drug esketamine or Spravato by Janssen ( JNJ ) for treatment-resistant depression and major depressive disorder with suicidal thoughts, Axsome's ( AXSM ) approved Auvelity or Axs-05's for major depressive disorder which is thought to act on glutamate, dopamine and norepinephrine. Relmada's ( RLMD ) REL-1017 also works on that receptor, had reported positive Phase 2 data , but those were not able to be repeated in the recently reported Phase 3 topline readout which have caused the stock to fall tremendously.

The painful abandonment of NYX-2925

NYX-2925 had been Aptinyx's lead drug candidate for painful diabetic peripheral neuropathy and fibromyalgia. The three indications had pain as their common denominator. The year 2022 saw Aptinyx finally abandoning further development of the drug as all three Phase 2 failed to reach their primary endpoint, despite showing some efficacy.

On January 16, 2019, Aptinyx reported topline results for NYX-2925 in a phase 2 trial for painful diabetic peripheral neuropathy. The drug candidate failed to achieve the primary endpoint, despite being safe and well-tolerated, and having shown improvements on pain and other endpoints in patients on the 50 mg dose. Aptinyx nonetheless started a Phase 2b study in this indication.

On April 7, 2022, Aptinyx reported NYX-2925 failing to reach statistical significance in painful diabetic peripheral neuropathy in its Phase 2b study, despite showing an improvement in average daily pain scores.

On August 12, 2022, Aptinyx reported that NYX-2925 did not show statistically significant improvement in pain associated with fibromyalgia, despite showing a trend toward clinically meaningful improvement. Though NYX-2925 outperformed placebo, by the end of the study the placebo group had improved such that the separation was not clinically meaningful.

NYX-458

Introduction

NYX-458 is being tried for the treatment of cognitive impairment associated with Parkinson's disease and dementia with Lewy bodies, with the underlying assumed mechanism of action being the reduction in NMDA receptor expression due to increased deposits of the protein alpha synuclein in the brain. In Parkinson's disease, which encompasses most patients, dopaminergic neurons are damaged, and one of their function is the regulation of NMDA receptors, which are essential for communication between nerve cells at the synapses.

The unmet need is obviously there, with about half of Parkinson's disease patients experiencing cognitive impairment, though the onset of such dementia is often only in the later stages of disease.

Earlier results

The Phase 1 study had shown a favorable safety profile.

As for the results we can go on so far relating to cognition, NYX-458 has shown quite some convincing activity in preclinical rat and primate models.

In aged rat models, NYX-458 was seen to reverse learning deficit to the level of that of young rate, and was seen to enhance a process thought necessary for learning and memory by the name of long-term potentiation or LTP.

In human primate models affected by a neurotoxin, NYX-458 was seen to reverse cognitive impairment over intervals running from 1 to 21 days, with effects lasting 3 months after the final dose.

Ongoing Phase 2 study with upcoming readout end of February - beginning of March 2023

The ongoing randomized placebo-controlled Phase 2 study has a readout upcoming by the end of February or beginning of March 2023 at the latest, as announced by company management during a February 15, 2023 investor call . The trial was reported to be initiated on December 05, 2019, and will cover a 12 week trial period with daily oral dosing of NYX-458-10 mg, 30 mg, or 100 mg. The majority of its 99 patients have dementia associated with Parkinson's disease, and most also have a diagnosis of mild cognitive impairment or dementia. While the study's primary endpoint is still safety and tolerability - which I assume will be met given the successful Phase 1 trial - multiple secondary endpoints evaluate different Cogstate neurocognitive tests which will results in a composite score.

Additionally, Ecog-12 and PDAQ-15 will measure functional abilities in daily life.

All of the data together should allow Aptinyx to figure out whether its drug candidate shows any signal of efficacy, and what the extent of such efficacy could be. Aptinyx hopes to see an effect on the overall Cogstate composite score, and at least a favorable trend on activities of daily living.

If the data would be positive, Aptinyx plans to discuss them with the FDA to see what the requirements for an NDA could be, so as to design its potentially pivotal trial.

Potentially binary results

The truth is, at this point investors have little to go on when it comes to NYX-458, and that may be part of the reason why Aptinyx's share price remains so depressed.

The study results in primates, which the company had called striking upon initiation of the Phase 2 study, are the closest to what investors could hope for. I find that study in macaques interesting from the perspective of several time points and because it did not interfere with levodopa. The cognitive deficit induced apparently lasted three months, whereas the reversal of cognitive deficit was immediate, persistent and improving, with effects lasting 3 months after the final dose. This could indicate the potential of treatment effect that may be long-lasting.

On the other hand, apart from some wins, modulating the NMDA receptor has also led to quite some failures so far, including the repeated failures of NYX-2529. Analyst Joon Lee from Truist Securities wrote a note on August 15, 2022, in which he took the stance that the lack of clear results may be due to the fact that Aptinyx's drug candidates are non-channel blockers of NMDA, like rapastinel and CTP-692, in contrast to good data from NMDA channel blockers. Of course that is just a thesis and meanwhile, the facts may have caught up with it as REL-1017 which is an NMDA channel blocker did not confirm in its Phase 3 trial as mentioned above. Of course Relmada's trial's results should not mean that suddenly, non-channel blockers are working. But I do think the above analysts sees things rather black-and-white, after the preclinical data and even earlier data in humans reported by Aptinyx for its other/earlier drug candidates.

The results in primates as reported above seem to indicate NYX-458 might be up to something, but preclinical models often show strong results which cannot be repeated in humans, like with NYX-783.

NYX-783

Introduction

NYX-783 is another oral positive allosteric modulator of NMDA receptors, which is being tested in a Phase 2b trial for post-traumatic stress disorder or PTSD, and which will soon see a trial start in opioid use disorder. For PTSD, NYX-783 has received fast-track designation by the FDA.

The underlying rationale is that both indications see dysregulation of NMDA-mediated processes, with NYX-783's goal being to increase glutamatergic activity in key regions to alleviate emotional symptoms or withdrawal effects, and promote learning.

Preclinical studies of NYX-783 had shown particularly strong results in psychiatric models, models of fear extinction , and models of substance abuse.

NYX-783's favorable safety profile was confirmed in a Phase 1 clinical study.

NYX-783 for PTSD

The only class of antidepressant medicines currently approved to treat PTSD is SSRI's or selective serotonin reuptake inhibitors, which basically inhibit reuptake of serotonin in the synaptic space. Their effect is seen rather late, and they only work in a limited number of patients.

An earlier four-week Phase 2a study which had been initiated in 2019 in patients with PTSD, with patients on a 50 mg dose, had shown signals of symptom reduction, with a statistically significant improvement on CAPS-5 Arousal and Reactivity Score, and a clinically meaningful improvement which trended towards statistical significance on CAPS-5 Total Score. Seeking Alpha contributor Avisol Capital Partners considered in July 2021 that this trial produced dubious data due to a complicated trial design, removing patients with high placebo response, where no population met the primary endpoint Caps-5 total score.

In the current Phase 2b trial which was reported to be initiated in December 2021, approximately 300 patients will be taking NYX-783 for 10 weeks. The key primary endpoint will again be CAPS-5 total score as primary endpoint, and key secondary endpoints will be clinicians' and patients' impressions of severity and improvement.

A topline data readout is expected for the second half of 2023.

The main difference with the previous trial is its duration, but compared to the diseases which NYX-458 is in trials for, the indications targeted with NYX-783 are considered to be reversible, and symptom treatment is essential. Hence, treatment may not necessarily be symptomatic, but may be able to help patients substantially in dealing with their indications.

NYX-783 for opioid use disorder

NYX-783 will also be tested soon for opioid use disorder, after the company announced on November 03, 2022 that a 5.6 million NIH grant had been received for that indication.

The Phase 1 trial that should start soon and which the company hopes to read out still in 2023 will be randomized and placebo-controlled, and is to assess drug-drug interaction with oxycodone, as well as safety and pharmacokinetics, in patients with opioid addiction.

Financials

The last-reported cash balance of Aptinyx is $66.5 million, which the company claims should provide runway into 2024 and should enable readouts from its two ongoing Phase 2 studies. Aptinyx is burning through approximately $13 million per quarter, which should allow it to continue work into 2024, but I understand from the latest SVB investor call that the company may raise money in case results from NYX-458 are good. As we are a quarter later since the latest quarterly call, I will assume that the company now sits at about $50 million in cash.

Insider ownership stands at 13%, but there have not been any recent insider buys. Institutional ownership is at 48%. Short interest is low, at 0.21%.

Risks

At this point, all readouts from Aptinyx are binary, so investing in the stock is high-risk. The preclinical results indicate that the company's drug candidates may show some success, but the question remains whether that will be clinically meaningful. Looking at the company's past performance does not instill great confidence, but the drug candidates are different now, as are the indications and primary endpoints.

There are other NMDA-targeting drugs and drug candidates, and other drugs in development for the diseases mentioned, so there is a real competitive risk. I particularly refer to Truist Securities analyst Joon Lee's reasoning, mentioned above, as to why he believes Aptinyx's drug candidates may not offer much hope of success. Personally, however, I do not share his views.

Conclusion

Aptinyx has two NMDA-receptor-modulating drug candidates that are being tried in randomized placebo-controlled Phase 2 trials, that will read out soon. A readout for NYX-458 in Parkinson's disease dementia is announced for the end of February or the beginning of March 2023, and a readout for NYX-783 for PTSD for later this year.

As for NYX-458, investors have little to go on to assess risk, apart from strong preclinical data, particularly in non-human primates where a strong and lasting cognitive reversal was seen.

For NYX-783 for PTSD, an earlier short Phase 2 trial had brought a mixed bag of results. Perhaps the 10-week trial may do better, perhaps it may not.

A randomized placebo-controlled Phase 1 trial with NYX-783 will soon be initiated for opioid use disorder, after a 5.6 million NIH grant for that indication.

Both upcoming Phase 2 readouts could be binary, given the current market cap of the stock, and as the company is currently trading at some $10 million less than the ~$50 in cash I estimate it currently holds. The stock does seem to have moved up in anticipation of the data for NYX-458.

For the reasons above, I am rating the company as a Hold and am keeping it on my watchlist in light of the upcoming readout for NYX-458.

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